India is waiting for heavy rains to revive weak economy

07/11/2019

India needs heavy rainfall during the monsoon season. Rain could stimulate agricultural production and prompt growth of the third largest economy in Asia, but so far the precipitations have not been enough, according to CNBC.

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In June, the first month of the monsoon season, the total rainfall in India was 33% below the average for 50 years, said the Indian Meteorological Department. The rains intensified in July, and the total rainfall this month will affect agricultural production in India and overall economic growth, analysts say.

"The main sowing takes place in July. This is a critical month of the monsoon season for the agricultural sector, when more than 50% of the crop is sown during the Harif season," Citi analysts wrote last week. Crops grown during the Harif season include rice, corn, sorghum, and cotton.

India’s agricultural sector is of great economic and political importance. According to Rajiv Biswas, chief economist for the Asia-Pacific region at IHS Markit, this industry accounts for about 14% of the country's economy and 42% of total employment.

Biswas noted that about a third of the manufacturing industry in India, which accounts for about 18% of the country's GDP, is associated with the processing of agricultural products into food. Since about 55% of India’s arable land depends on rainfall, the monsoon season can affect economic activity in the agricultural sector and related industries.